NFIU applauds court decision on LG autonomy

The Nigerian Financial Intelligence Unit (NFIU) has applauded a court decision that ruled in its favor regarding local government account management. The agency also promised to provide information on transactions involving local government funds to the Economic and Financial Crimes Commission and Independent Corrupt Practices Commission

This is in response to a decision in a suit filed by the Attorneys General of the 36 states seeking to prevent the NFIU from enforcing its rules on local government accounts across the country.

The suit named the Attorney-General of the Federation (AGF), the NFIU, and the Nigeria Union of Local Government Employees as defendants.

In May 2019, the NFIU established guidelines to protect local governments from state governments’ undue influence in the administration of monthly allocations.

Cash withdrawals from local government accounts were also limited to N500,000 per day under the new rules.

The plaintiffs (state governments) alleged, however, that the recommendations violated the Nigerian constitution’s guarantee of financial autonomy to the individual states.

Justice Inyang Ekwo of the Federal High Court in Abuja ruled in favor of the NFIU in his decision on Monday.

Mr Ekwo ruled that the case was without merit. He stated that the essence of the NFIU guidelines is to establish financial transparency in local government transactions.

Mr Ekwo agreed with the AGF that going by Section 23 (2) (a), Section 28 (2) and Section 31 of the NFIU Act, the “unit has the power to make the guidelines.”

In his reaction to Monday’s court ruling, the Director/CEO of the NFIU, Modibbo Tukur, described the judge’s decision as “excellent.”

Mr Tukur declared in a statement issued by the NFIU’s chief media analyst, Ahmed Dikko, that all transactions involving local government funds would be reported to the anti-corruption agencies, the ICPC and the EFCC.

He went on to say that the federal government is always ready to help states and local governments by providing funding for their governance responsibilities.

He also stated that local governments can now decide on funding for improving local security.

Local governments can now decide on cash to be used to strengthen local security, he added.

The guideline requires that state and local government joint accounts be operated solely as transit accounts from which funds are distributed directly to local government accounts.

Financial institutions have been directed to ensure that the guidelines are fully implemented by June 1, 2019.

The National Assembly passed a bill in March this year abolishing the state joint local government account and creating a special account to which all allocations due to local government councils from the federation account and state government shall be paid.

According to the bill, each local government council is required to establish and maintain its own special account known as the Local Government Allocation Account, into which all allocations will be paid.

The legislation also requires each state to pay a proportion of its internally generated revenue to local government councils in its jurisdiction on the terms and in the manner prescribed by the House of Assembly.

However, because the bill seeks to amend a constitutional provision, it must be approved by at least 24 state legislatures.